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18/07/22 Briefing




The S&P 500 futures are up 37 points and are trading 1.0% above fair value. The Nasdaq 100 futures are up 145 points and are trading 1.2% above fair value. The Dow Jones Industrial Average futures are up 327 points and are trading 1.0% above fair value.

The futures for the major indices are indicating a modestly higher open to follow through with Friday's gains. There's relatively positive central bank news in the mix this morning. People's Bank of China Governor Yi Gang says the bank will step up with stronger support for China's struggling economy. Also, the WSJ noted that the Fed is likely to hike 75 basis points at its next meeting, versus a feared 100 basis point rate hike.

Other factors indicating a more risk-on tone are the rise in oil prices and strength in cryptocurrencies. WTI crude oil futures are back near the $100.00/bbl level, up 1.0% to $98.58/bbl currently. Bitcoin is up 3.4% to $22,063 and Ethereum is up 9.4% to $1,472.24.

The 2-yr Treasury note yield is up two basis points 3.15% and the 10-yr note yield is up two basis points to 2.95%.

In corporate news:

  • Bank of America (BAC 32.12, -0.13, -0.4%): Bank of America misses by $0.02, reports revs in-line

  • Synchrony Financial (SYF 32.66, +1.16, +3.7%): Synchrony Financial beats by $0.22

  • Boeing (BA 153.85, +6.11, +4.1%): Delta Air Lines to modernize single-aisle fleet with up to 130 Boeing 737 MAX jets; and the company is very close to resuming 787 deliveries, according to The Wall Street Journal.

  • Goldman Sachs (GS 303.50, +9.63, +3.3%): Goldman Sachs beats by $1.12, beats on revs; approves 25% increase in quarterly dividend to $2.50/share

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a higher note while Japan's Nikkei was closed for Marine Day. Japan's Nikkei: CLOSED, Hong Kong's Hang Seng: +2.7%, China's Shanghai Composite: +1.6%, India's Sensex: +1.4%, South Korea's Kospi: +1.9%, Australia's ASX All Ordinaries: +1.3%.

  • In economic data:

  • New Zealand's Q2 CPI 1.7% qtr/qtr (expected 1.5%; last 1.8%); 7.3% yr/yr (expected 7.1%; last 6.9%)

  • Singapore's June trade surplus SGD4.494 bln (last surplus of SGD3.013 bln). June non-oil exports 3.7% m/m (expected 2.3%; last 2.8%); 9.0% yr/yr (expected 6.7%; last 12.0%)

  • In news:

  • China extended lockdown measures in some areas.

  • New Zealand's Q2 CPI increased at its fastest yr/yr pace in more than 30 years.

  • The Reserve Bank of New Zealand announced a new standing repurchase facility after short-term rates slipped below the official cash rate.

  • South Korea's President Yoon will meet with U.S. Treasury Secretary Yellen tomorrow.

  • Major European indices trade in the green. STOXX Europe 600: +1.3%, Germany's DAX: +1.3%, U.K.'s FTSE 100: +1.3%, France's CAC 40: +1.5%, Italy's FTSE MIB: +1.5%, Spain's IBEX 35: +1.5%.

  • In economic data:

  • Italy's May trade deficit EUR12 mln (last deficit of EUR3.639 bln)

  • Spain's May trade deficit EUR4.76 bln (last deficit of EUR6.40 bln)

  • In news: 

  • The U.K.'s conservative party leadership contest will continue today.

  • Italy's Prime Minister Draghi is reportedly still intent on resigning in the coming days.

  • Moody's affirmed Spain's Baa1 rating with a Stable outlook.

  • Bank of England policymaker Saunders said that more monetary tightening is likely to take place in the U.K.


U.S. equity futures:

  • S&P 500 Futures: +37 @ 3,900

  • DJIA Futures: +327 @ 31,615

  • Nasdaq 100 Futures: +145 @ 12,129

Overseas:

  • Europe: DAX +1.3%, FTSE +1.3%, CAC +1.5%

  • Asia: Nikkei closed for holiday, Hang Seng +2.7%, Shanghai Composite +1.6%

Commodities:

  • Crude Oil +0.98 @ 98.57

  • Nat Gas  +0.169 @ 7.095

  • Gold +8.60 @ 1712.20

  • Silver +0.156  @ 18.750

  • Copper +0.0765 @ 3.3105

U.S. Summary:

  • Earnings/Guidance:

  • Ashland (ASH) reports prelim upside Q3 results and raises guidance

  • Bank of America (BAC) misses by $0.02, reports revs in-line

  • Goldman Sachs (GS) beats by $1.12, beats on revs; approves 25% increase in quarterly dividend to $2.50/share

  • ODP Corporation (ODP) sees Q2 EPS above consensus; approves $600 million share repurchase authorization

  • Synchrony Financial (SYF) beats by $0.22

  • General News:

  • Fed preparing another 75 basis point rate increase at next meeting, leaning against a full percentage point rate increase, according to The Wall Street Journal

  • President Biden acknowledged that his climate change and tax increase bill is defeated following rejection from Senator Joe Manchin, according to New York Times

  • Russia advises troops to "further intensify" military action in Ukraine, according to New York Times

  • Treasury Secretary Janet Yellen believes Congressional deal will be "meaningful" regarding Obamacare subsidies and other healthcare measures, according to Bloomberg

  • Coronavirus cases in China rise as situation in Shanghai remains severe, according to Bloomberg

  • Senator John Cornyn (R-TX) says he will vote to proceed on $52 billion semiconductor manufacturing bill this week

  • AbbVie (ABBV) submits MAA to EMA for atogepant for the preventive treatment of migraine

  • Aecom Tech (ACM) selected by Arizona Department of Transportation to develop plan for the statewide deployment of electric vehicle charging stations

  • Air Lease (AL) announced long-term lease placements for six new Airbus (EADSY) A220-300 aircraft with TAAG Angola Airline

  • Apyx Medical (APYX) receives FDA 510(k) clearance for the use of Renuvion

  • Boeing (BA) and ANA Holdings (ALNPY) formalized order of 20 737-8 airplanes

  • Boeing (BA): Delta Air Lines (DAL) to modernize single-aisle fleet with up to 130 Boeing (BA) 737 MAX jets

  • Boeing (BA) very close to resuming 787 deliveries, according to The Wall Street Journal

  • Franco-Nevada (FNV) announces $352.5 million financing package with G mining ventures on the Tocantinzinho Gold Project

  • Kohl's (KSS) CTO steps down, names Siobhn Mc Feeney as CTO

  • J.M. Smucker (SJM) increases its quarterly dividend 3% to $1.02/share

  • Mastercard (MA) and D-Wave Systems announced a multi-year strategic alliance to champion the acceleration and adoption of quantum computing solutions

  • Red Rock Resorts (RRR) decided to permanently close its Texas Station, Fiesta Rancho, and Fiesta Henderson properties, which have been closed since the beginning of the pandemic

  • Starbucks (SBUX) is not selling UK unit, according to Reuters

  • Suncor Energy (SU) enters into agreement with Elliott Investment Management

  • Walt Disney (DIS): Hulu is now company's fastest-growing streaming service, helped by new content in attempt to attract wider variety of viewers, according to The Wall Street Journal

  • M&A:

  • Evoqua Water (AQUA) has acquired privately-held EPICOR, Inc.; financial terms were not disclosed

  • Fresh Del Monte Produce (FDP): I Squared Capital mulling partnership or acquisition, according to Bloomberg

  • Precision Drilling (PDS) to acquire the well servicing business and associated rentals assets of High Arctic Energy Services for $38.2 mln

  • Primo Water (PRMW) announced that Primo Water North America, a wholly-owned subsidiary of Primo, has acquired Highland Mountain Water, located in Atlanta, Georgia; terms not disclosed

  • Spectrum Brands (SPB) and ASSA ABLOY extend agreement for ASSA ABLOY to acquire the HHI division of Spectrum Brands to June 30, 2023

  • Twitter (TWTR) in latest proxy filing unanimously recommends that shareholders support merger agreement with Elon Musk

  • Syndicate

  • Bally's (BALY): Standard RI notifies of its election to tender 360,000 common shares in modified Dutch auction

  • Earthstone Energy (ESTE) files for 5,650,977 share common stock offering by selling shareholders; also files for 29,837,033 share common stock offering by selling shareholders

  • Funko (FNKO) files for $100 mln mixed securities shelf offering; also files for 17,318,008 share common stock offering by selling shareholders

  • Icahn Enterprises (IEP) files for $1.2 bln mixed securities shelf offering

  • Immunocore (IMCR) announces $140 million private placement financing

  • LendingTree (TREE) files mixed securities shelf offering

  • Repay Holdings (RPAY) files for $440 mln convertible note offering by selling shareholders

  • SoFi Technologies (SOFI) files for $1 bln mixed securities shelf offering

  • Vertex (VERX) files for 36,197,237 share common stock offering by selling shareholders

  • IPOs:

  • Priced to Trade:

  • No IPOs expected.

Gapping Up/Down

  • Gapping up:

  • QD +61.3%, ITHX +25.1%, EYES +9.5%, RYTM +4.9%, PRMW +3.6%, JD +3.5%, SYF +3.2%, KWEB +3%, BABA +2.9%, STLA +2.8%, BA +2.7%, BALY +2.6%, NVDA +2.6%, BIDU +2.4%, CRNT +2.3%, NXPI +2.1%, TCOM +2.1%, CVNA +2.1%, SMH +1.9%, AMD +1.9%, SWKS +1.9%, MU +1.8%, VOD +1.7%, QQQ +1.1%, IWM +1.1%, SPY +0.9%, DIA +0.9%, ISEE +0.9%, INTC +0.9%, STM +0.8%

  • Gapping down:

  • EVLO -5%, AL -3%, FNKO -2%, ESTE -0.7%, GSK -0.5%, TWTR -0.5%, VERX -0.5%, SOFI -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Chunghwa Telecom (CHT) upgraded to Overweight from Neutral at JP Morgan

  • Expensify (EXFY) upgraded to Buy from Neutral at BofA Securities; tgt raised to $25

  • JPMorgan Chase (JPM) upgraded to Hold from Sell at Berenberg; tgt $120

  • Houlihan Lokey (HLI) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt lowered to $82

  • Rayonier Adv. Materials (RYAM) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt lowered to $5

  • Sims Metal Mgmt (SMSMY) upgraded to Buy from Neutral at Citigroup

  • WD-40 (WDFC) upgraded to Buy from Neutral at DA Davidson; tgt $205

  • Yum! Brands (YUM) upgraded to Buy from Sell at Goldman; tgt raised to $135

  • Downgrades:

  • Aeva (AEVA) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $3

  • BlackLine (BL) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $64

  • Brinker (EAT) downgraded to Neutral from Buy at Goldman; tgt lowered to $28

  • Chipotle Mexican Grill (CMG) downgraded to Buy from Conviction Buy at Goldman; tgt lowered to $1720

  • Comstock (CRK) downgraded to Sell from Neutral at Goldman; tgt $12

  • Ellington Financial (EFC) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $14.75

  • Enact Holdings (ACT) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $27

  • AG Mortgage Investment Trust (MITT) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $8.50

  • Fox Corporation (FOXA) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $38

  • H&M (HNNMY) downgraded to Neutral from Buy at UBS

  • Hologic (HOLX) downgraded to Neutral from Buy at BTIG Research

  • IDEX Corp (IEX) downgraded to Hold from Buy at Stifel; tgt lowered to $188

  • Int'l Paper (IP) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $47

  • Janus Henderson Group (JHG) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $18

  • Lazard (LAZ) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $30

  • Lemonade (LMND) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $20

  • MacroGenics (MGNX) downgraded to Neutral from Outperform at SMBC Nikko; tgt $5

  • MFA Financial (MFA) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $12.75

  • Moelis (MC) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $36

  • New York Mortgage Trust (NYMT) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $3

  • Paramount Global (PARA) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $22

  • Radian Group (RDN) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $27

  • Udemy (UDMY) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $11

  • Others:

  • Absci Corporation (ABSI) initiated with a Buy at Truist; tgt $8

  • Altus Power (AMPS) initiated with a Neutral at JP Morgan; tgt $9

  • Chesapeake Energy (CHK) initiated with a Buy at Goldman; tgt $106

  • Clene (CLNN) initiated with a Buy at H.C. Wainwright; tgt $16

  • DICE Therapeutics (DICE) initiated with a Buy at H.C. Wainwright; tgt $40

  • Badger Meter (BMI) initiated with a Neutral at Northcoast

  • Delta Air Lines (DAL) placed on 90-day Positive Catalyst Watch on Citigroup

  • Ecolab (ECL) initiated with a Neutral at Northcoast

  • Franklin Electric (FELE) initiated with a Buy at Northcoast; tgt $82

  • Kraft Heinz (KHC) initiated with a Buy at Mizuho; tgt $48

  • Lindsay Corp (LNN) initiated with a Buy at Northcoast; tgt $150

  • Mueller Water (MWA) initiated with a Neutral at Northcoast

  • Nkarta (NKTX) initiated with an Outperform at SVB Leerink; tgt $30

  • Oyster Point Pharma (OYST) initiated with a Buy at H.C. Wainwright; tgt $20

  • Pentair (PNR) initiated with a Neutral at Northcoast

  • Penumbra (PEN) initiated with an Outperform at RBC Capital Mkts; tgt $195

  • Tesla (TSLA) added to Catalyst Call Buy List at Deutsche Bank

  • Tetra Tech (TTEK) initiated with a Neutral at Northcoast

  • Valmont (VMI) initiated with a Buy at Northcoast; tgt $300

  • Watts Water Tech. (WTS) initiated with a Neutral at Northcoast

  • Xylem (XYL) initiated with a Neutral at Northcoast

Upcoming Events:

  • Econ Data:

  • 10:00 ET: July NAHB Housing Market Index (Briefing.comconsensus 66; Prior 67)

  • 16:00 ET: May Net Long-Term TIC Flows (Prior $87.7 billion)

  • Earnings:

  • Monday (Jul 18)

  • Morning:  BAC SCHW GS PLD SYF

  • Afternoon: ELS IBM MRTN

  • Tuesday (Jul 19)

  • Morning: ALLY CFG HAL HAS JNJ LMT MAN NVS SBNY SI TFC

  • Afternoon: CALM FULT HWC HOPE IBKR JBHT NBHC NFLX OMC PNFP UCBI

  • Wednesday (Jul 20)

  • Morning:  ABT ASML BMI BKR BIIB CMA ELV FHN HCSG LAD MTB MKTX NDAQ NTRS

  • Afternoon:  AA CNS CCK CCI CSX CVBF DFS EFX FNB FR KMI KNX LSTR LVS PACW XM REXR RLI SEIC SLG STLD TSLA UMPQ UAL VMI WTFC

  • Thursday (Jul 21)

  • Morning: AIR ABB ALK AAL T AUB AN BANC BKU BX COLB DHI DHR DPZ DOV DOW EWBC FITB FCX GATX HRI HOMB HBAN IPG IQV KEY MMC NOK NUE PPBI PM POOL DGX SASR SAP SFNC SNA SON SNV TCBI TSCO TRV TPH UNP WBS WNS

  • Afternoon:  ASB OZK BJRI SAM COF FFBC GBCI HTH ISRG MAT PPG RHI STX SNAP SIVB THC UFPI VICR WRB WAL

  • Friday (Jul 22) 

  • Morning:  AXP ALV CLF FBP GNTX HCA NEE NEP RF ROP SLB SXT TWTR VZ

  • Afternoon: None

Asia & Europe detail:

Asia: Nikkei closed for holiday, Hang Seng +2.7%, Shanghai Composite +1.6%

Equity indices in the Asia-Pacific region began the week on a higher note while Japan's Nikkei was closed for Marine Day. China extended lockdown measures in some areas. New Zealand's Q2 CPI increased at its fastest yr/yr pace in more than 30 years. The Reserve Bank of New Zealand announced a new standing repurchase facility after short-term rates slipped below the official cash rate. South Korea's President Yoon will meet with U.S. Treasury Secretary Yellen tomorrow.

  • In economic data:

  • New Zealand's Q2 CPI 1.7% qtr/qtr (expected 1.5%; last 1.8%); 7.3% yr/yr (expected 7.1%; last 6.9%)

  • Singapore's June trade surplus SGD4.494 bln (last surplus of SGD3.013 bln). June non-oil exports 3.7% m/m (expected 2.3%; last 2.8%); 9.0% yr/yr (expected 6.7%; last 12.0%)

---Equity Markets---

  • Japan's Nikkei: CLOSED

  • Hong Kong's Hang Seng: +2.7%

  • China's Shanghai Composite: +1.6%

  • India's Sensex: +1.4%

  • South Korea's Kospi: +1.9%

  • Australia's ASX All Ordinaries: +1.3%

---FX---

  • USD/JPY: -0.2% to 138.19

  • USD/CNH: -0.3% to 6.7430

  • USD/INR: +0.2% to 79.94

Europe: DAX +1.3%, FTSE +1.3%, CAC +1.5%

Major European indices trade in the green. The U.K.'s conservative party leadership contest will continue today. Italy's Prime Minister Draghi is reportedly still intent on resigning in the coming days. Moody's affirmed Spain's Baa1 rating with a Stable outlook. Bank of England policymaker Saunders said that more monetary tightening is likely to take place in the U.K.

  • In economic data:

  • Italy's May trade deficit EUR12 mln (last deficit of EUR3.639 bln)

  • Spain's May trade deficit EUR4.76 bln (last deficit of EUR6.40 bln)

---Equity Markets---

  • STOXX Europe 600: +1.3%

  • Germany's DAX: +1.3%

  • U.K.'s FTSE 100: +1.3%

  • France's CAC 40: +1.5%

  • Italy's FTSE MIB: +1.5%

  • Spain's IBEX 35: +1.5%

---FX---

  • EUR/USD: +0.7% to 1.0156

  • GBP/USD: +1.0% to 1.1981

  • USD/CHF: +0.1% to 0.9760


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures